Complement Catalyst: Extended Quadratic Funding—Zero Operational Costs
This section focuses on understanding the drivers behind the proposed project. E.g., Why should this project be undertaken?
Videos: https://shinid.notion.site/Videos-Complement-Catalyst-1df3d106030b80e58d24c0ca89f8691c?pvs=4
We propose an innovative funding mechanism to complement Project Catalyst by addressing five critical challenges in blockchain ecosystem innovation funding: concentrated voter power, treasury fund limitations, inadequate impact reporting, uncertain ROI, and inefficient milestone management. Our solution has zero operational costs—100% of funds go directly to Cardano projects. By combining quadratic funding with a reputation-based system, we create a more democratic, transparent, and effective allocation process while maximizing treasury fund impact.
Funding innovation within blockchain ecosystems presents significant challenges, yet some initiatives shine brightly. Project Catalyst stands out as a prime example, having fueled over 2,100 projects with more than $150 million, a clear testament to Cardano’s dedication to decentralized innovation. Still, persistent hurdles across all ecosystems underscore the need for continued refinement in funding approaches.
Current Problem: Concentrated voting power is a widespread issue across blockchain ecosystems. In Project Catalyst, recent research by Nelson et al. (2024) shows that just 1.5% of wallets can determine funding outcomes in 97.5% of voting scenarios. Fund 13 starkly demonstrated this when a single entity effectively controlled most allocation decisions. To address this issue, Project Catalyst plans to implement a generalized quadratic voting mechanism in Fund 14.
Impact: When funding decisions reflect the interests of a few large stakeholders rather than the broader community, we risk:
Current Problem: Blockchain ecosystem treasury, including Cardano’s, cannot indefinitely sustain the growing demand for funding as the ecosystem expands.
Impact: Without supplementary funding sources, fewer worthy projects receive support, slowing ecosystem growth and adoption.
Current Problem: Measuring funded projects' contributions to ecosystem growth remains a significant challenge across all blockchain ecosystems.